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Has Sri Lanka become a poor country?

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By Dr Laksiri Fernando

After artificially fixing the exchange rate in Sri Lanka for so many years (since 2001), whether the sudden floating of the rupee rate to dollar is a wise decision is altogether a different matter. However, because of this decision the dollar rate has jumped from Rs. 197/203 to 321/328 since this decision was taken on 9 March, just a month ago.

Has Sri Lanka become a ‘low income’ country because of this decision, and other circumstances, is the first question that this short article raises? In 2019, as a mouthpiece of the government, the Central Bank announced that “Sri Lanka graduated to the upper middle income country status as per the World Bank classification of countries published in July 2019.” On the other hand, the World Bank downgraded Sri Lanka to a ‘lower middle income’ country considering the currency crisis and inflation, in July 2020, much to the disappointment of the government and economic bureaucrats.

Inaccurate Classifications

It is the World Bank that classifies countries as ‘low income,’ ‘lower middle income,’ ‘upper middle income,’ and ‘high income’ countries whether those criteria are reasonable or accurate. The following are the measures that they use, simply said, based on the per capita GDP.

Group GDP Range(per capita)
Low Income 0 – 1036
Lower Middle Income 1036- 4,045
Upper Middle Income 4,045 – 12,535
High Income 12, 535 –

As I have raised this question previously, the income range for ‘low income’ or poor countries is arbitrary and excludes many countries who need international support from institutions and countries. The range could be up to $ 3,000 and not $ 1,036. Sri Lanka is only one country among them. There can be a tendency on the part of international organizations, including the World Bank and the IMF to avoid responsibility to help poor countries as those organizations are dominated by Western or rich countries.

Right to Seek Assistance

To seek assistance from international organisations and rich countries, however, is a right of poor and developing countries. On behalf of the people living in those countries, this right is absolutely a human right.

Strangely enough or ironically, the behaviour and attitudes of many elite politicians in poor and low-income countries go hand in glove with these elite politicians and bureaucrats in rich countries and international institutions. Sri Lanka is a very good examples, and most of the arguments in this direction come from the ‘nationalists’ and ‘leftists.’

Before going into details of this matter, let me first answer the question whether Sri Lanka has now fallen into the pit of low-income or poor countries. Sri Lanka’s GDP or per capita GDP is calculated first based on rupees. Let us take an example.

According to the Department of Census and Statistics, Sri Lanka’s GDP on market prices in 2021 was Rs. (million) 16,809,309. Sri Lanka’s population is 22 million. Therefore, Sri Lanka’s per capita income was Rs. 764,059 million.

As of today, the dollar value of this per capita GDP is just $ 2,380, based on the floating rupee (1 Dollar = Rs. 321), irrespective of the government’s ‘vision for prosperity’! The reasons are bad financial management, wishful thinking and power politics. The reasons apply not only to the present government but to all past governments.

IMF Assistance?

The second question that I want to raise is what is wrong in going to the IMF and seeking assistance? Sri Lanka joined the IMF in 1950 even before joining the UN (1955). One advantage the country has at present is ironically not seeking much assistance previously from this organisation meant to assist member countries (190 members now).

It was in 1965 that Sri Lanka first sought IMF ‘assistance’ and continued to do so until 2002 as a formality even without drawing the full amounts owed to the country under ‘Standby Arrangements.’ It was under J.R. Jayewardene that the country sought ‘Extended Fund Facility’ in 1979 due to the foreign exchange difficulties. But that amount had to be paid back in three years which raised much criticism. In 1988, the same administration sought ‘Structural Adjustment Facility’ again to be paid back in three years.

I happened to meet the IMF representative to South Asia/Sri Lanka in 1990 at a Norwegian friend’s place in Geneva (Inger Nordback). He was one who appeared in picture with JR during a famous ‘Vap Magul’ festival. Our casual meeting led to some talk about ‘IMF conditions’ and he told me that the problem with Sri Lankan representatives was that ‘they don’t bargain but leave with dissatisfaction after meetings.’ I hope this is not and should not be the case today.

Sri Lanka has received the last ‘Extended Fund Facility’ from IMF in 2016 to the amount of $ 952,230,000 to be paid in 2020 and still 892,283,000 is outstanding. Perhaps this is understandable, given the Covid pandemic and other circumstances. Otherwise, Sri Lanka has a ‘clean slate’ thanks to the ‘nationalist and leftist’ antipathy against the IMF!

Debt Restructuring

Let me touch on some other IMF matters. When Rajan Philips wrote ‘Mayhem in Mirihana; Shaken Gota is Home Under Curfew’ (Colombo Telegraph, 3 April), I posted the following comment and there were scathing attacks on me as usual!

“The declaration of curfew is acceptable to prevent further anarchy and violence today based on the experience at Mirihana and other places. However, this should not continue. The immediate root cause should soon be addressed. The government (whatever) should immediately negotiate with the IMF to obtain $ 10 billion to end the fuel crisis, energy shortages, essential imports, and loan repayments of this year. Then the unrest might subside. Debt restructuring can be done from next year. If the government is multi-partisan, it is very much better in negotiating with the IMF. There is no point in obtaining ad hoc loans from countries although those could be utilized later. It is already too late. IMF officials completed discussions with the government officials in December although the Report came out in February. This is April. Whatever the weaknesses or biases of the IMF, it is the main international mechanism to rescue countries under international monetary constraints. Undoubtedly, Sri Lanka must agree for strict conditions which could be negotiated. When you fall into a pit, you must escape from the same pit.”

I was looking at the economic side of the crisis and still maintain the same positions except the fifth sentence of the above quote: ‘Debt restructuring can be done from next year.’

Obviously, debt restructuring should start forthwith. Past governments, including the present, have irresponsibly depended on international sovereign bonds at higher rates of interest and purely on commercial conditions even with China. A poor country like Sri Lanka cannot afford that. The present debt obligations for this year appear to exceed $ 7 billion. Forex reserves at present however do not exceed 2 billion, necessary for even essential imports.

The government has appointed a good three-member expert panel to advice and negotiate with the IMF. The appointment of the present Central Bank Governor is also commendable. While negotiating with the countries, like India and China, or institutions like the Asian Development Bank and the World Bank to postpone the dept repayments, if Sri Lanka could obtain around $ 10 billion from the IMF, some of the economic reasons for the present crisis can be ameliorated.

Political Crisis

The present political mobilisations with the slogan ‘Gota, go home’ are mainly political, of course based on economic and social reasons. However, to seek IMF assistance to resolve the economic crisis there should be some political stability. This is something Sri Lanka is lacking not only under the present government, but it was there even under the last government.

The spontaneous protests from non-political sources at least have understood this calamity without supporting any political party. The question however is what are the alternatives?

During the debates on the IMF report in Parliament, no MP on the government side or in the Opposition never came up with a constructive proposal. Even Sajith Premadasa’s argument was to resolve the Forex crisis acquiring money laundering revealed in the Pandora Papers. The gravity of the crisis was undermined. The debates were focused on personal attacks and trivial political matters.

The Opposition is now proposing a ‘no confidence motion’ on the government and an impeachment against the President if the former is successful. On the other hand, the so-called ‘independents’ who broke away from the government are proposing an ‘interim government’ until the economic crisis is resolved, and the country can hold elections. That kind of a government could include Ranil Wickremesinghe, M. A. Sumanthiran, and Harsha de Silva if not Sajith Premadasa. No Rajapaksa should be included except the President who should promise to leave politics within two years. Under such an interim government the President’s power should be curtailed. This could be the opening for changing the presidential system among other things.



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Opinion

Can a punishment-free child become a threat to Sri Lankan society?

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Children are the future of every nation, and the values they learn during childhood shape the society they will eventually lead. In Sri Lanka, where family traditions, respect for elders, and social responsibility have long been important cultural values, the way children are raised remains a topic of great interest. In recent years, many parents and educators have moved away from traditional forms of punishment and embraced more child-friendly approaches to discipline. While protecting children from physical and emotional harm is essential, an important question arises: can a child who grows up without any form of punishment or consequences become a threat to Sri Lankan society?

To answer this question, it is necessary to understand the difference between punishment and discipline. Punishment is often associated with penalties imposed for wrongdoing, while discipline refers to teaching children self-control, responsibility, and respect for rules. Modern child psychology generally discourages harsh physical punishment because it can cause fear, anxiety, and resentment. However, completely removing consequences for inappropriate behavior may create a different set of problems.

Sri Lankan society has traditionally emphasized discipline within the family. Parents, grandparents, and teachers have often played active roles in guiding children’s behavior. Respect for elders, obedience, and good manners have been considered important virtues. While some traditional disciplinary methods may no longer be acceptable, the underlying principle of teaching accountability remains relevant.

A child who never faces consequences for wrongdoing may struggle to understand the boundaries that exist in society. For example, if a child is allowed to insult others, damage property, or ignore rules without correction, they may develop the belief that their actions have no consequences. Such attitudes can become problematic when the child enters school, the workplace, or the wider community.

Sri Lankan schools already face challenges related to student discipline. Teachers often report difficulties in managing classrooms where some students refuse to follow instructions or respect school regulations. When children are not taught accountability at home, educational institutions may find it harder to maintain a productive learning environment. This can affect not only the individual student but also classmates whose education is disrupted.

Another concern is the development of entitlement. A child who is never told “no” may come to believe that personal desires should always be fulfilled. In a society where cooperation and mutual respect are essential, such attitudes can lead to conflicts with peers, teachers, employers, and even family members. Sri Lanka’s social fabric depends heavily on community relationships, and individuals who fail to respect others can weaken these bonds.

The influence of social media and modern technology has added another dimension to this issue. Today’s children have access to information and entertainment on an unprecedented scale. Without proper guidance and consequences, some may misuse technology, engage in cyberbullying, spread misinformation, or develop unhealthy habits. Parents who avoid setting limits may unintentionally expose children to risks that affect both personal development and social well-being.

The workplace offers another example of why accountability is important. Sri Lanka’s economic development depends on a workforce that is disciplined, responsible, and capable of working with others. Employers value punctuality, respect, and professionalism. Individuals who grow up without learning responsibility may find it difficult to meet these expectations, affecting both their personal success and the productivity of organizations.

However, it is equally important not to interpret this argument as support for harsh punishment. Research has shown that excessive physical or emotional punishment can have serious negative effects on children. Fear-based parenting may produce obedience in the short term but can damage confidence, trust, and mental health in the long term. Therefore, the solution is not stricter punishment but more effective discipline.

Positive discipline provides a balanced alternative. It involves setting clear rules, explaining expectations, and applying fair consequences when those rules are broken. For instance, if a child neglects schoolwork, they may lose certain privileges until responsibilities are fulfilled. If they damage property, they can be required to help repair or replace it. Such consequences teach accountability while preserving the child’s dignity.

Sri Lankan parents, teachers, and community leaders all have a role to play in nurturing responsible citizens. Families should create environments where children feel loved and supported but also understand that actions have consequences. Schools should encourage character development alongside academic achievement. Religious and community organizations can reinforce values such as honesty, compassion, and respect for others.

A balanced approach is especially important in a rapidly changing society. As Sri Lanka continues to modernize and integrate with the global community, young people must learn not only their rights but also their responsibilities. Freedom without responsibility can lead to selfishness, while discipline without compassion can lead to fear. The challenge is to find the middle ground.

A punishment-free child can become a concern for Sri Lankan society if the absence of punishment also means the absence of discipline and accountability. Children who never learn consequences may struggle to respect rules, authority, and the rights of others. However, harsh punishment is not the answer. The most effective approach combines love, guidance, clear boundaries, and fair consequences. By raising children who understand both freedom and responsibility, Sri Lanka can build a future generation that strengthens society rather than threatens it.

Saumya Aloysius

(An essayist, children’s writer and freelance writer who holds a Master’s Degree in Sociology from the University of Kelaniya)

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Opinion

SriLankan Airbus struck by lightning

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A representational image

On Friday 12 June, 2026, a SriLankan Airlines Airbus 330 was en route from Colombo to Sydney, Australia was about 45 minutes into its flight when a loud bang was heard, accompanied by a blinding flash. In what was assumed to be a lightning strike, the airplane’s left (No. 1) engine was damaged, forcing the aircraft to return to BIA-Katunayake, where it landed safely.

Lightning travels from cloud to cloud or cloud to ground. Because the aircraft is not electrically ‘grounded’, or ‘earthed’, it must have been in the path of the thunder bolt purely by chance. There is also a phenomenon whereby the aircraft may travel through an electrically charged atmosphere (for example a cloud) where an electrical charge could build up and strike, or be emitted, as lightning. In such an instance, pilots hear electrical static in their headsets before the strike. Usually, when lightning strikes an aircraft in flight, the electrical charges remain on the outside, as on a ‘Faraday’s Cage’ apparatus, and the passengers and crew are perfectly safe.

To help the efficient and safe discharge of static electricity from the airplane’s structure, static wicks, or static dischargers, are fitted at the trailing (rearmost) edges of the wings and tail surfaces. When an airplane has landed after a lightning strike, ground engineers count the number of wicks that may have been burnt out to ensure that a minimum (recommended) number is available for a subsequent flight. Sometimes, there is minor damage, like pitting of the paintwork at the points where the charges left the aircraft.

The last instance in the USA of an airplane believed to have been lost due to a lightning strike was on December 8, 1963, when a Pan Am Boeing 707-121, en route from Baltimore, Maryland to Philadelphia, Pennsylvania, suffered a fuel tank explosion, later determined to have been the result of a lightning strike. Since then, aircraft have been rendered immune from lightning damage thanks to extensive research conducted by manufacturers using high-voltage currents.

Interestingly, modern airliners have electronic instrument displays which don’t even flicker when the aircraft is struck by lightning. By a process of connecting all the metallic parts, known as ‘bonding’, the entire fuselage effectively becomes a protective cocoon, so electrical charges caused by lightning will always reside on the outside of the aircraft.

What is unusual in the recent SriLankan Airlines incident is the extent of damage to the left engine. Did it encounter hail or ingest something?

Only a thorough, independent inquiry by aviation safety investigators will reveal the cause.

GUWAN SEEYA

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Opinion

Beyond diagnosis: A strategic design for 7% growth by 2029 (Part I)

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“Vision without execution is hallucination.” – Thomas Edison

Introduction: Stabilisation Is Not Transformation

Sri Lanka has come a long way since the economic collapse of 2022. Inflation has been brought under control. Foreign reserves have improved. Debt restructuring has advanced. Government revenue has increased significantly through taxation reforms. The exchange rate has stabilised, and confidence has gradually returned to financial markets.

These achievements deserve recognition.

However, stabilisation should not be confused with economic transformation. A patient discharged from intensive care is not necessarily healthy. Likewise, an economy that has escaped collapse has not necessarily achieved sustainable prosperity.

The central economic question facing Sri Lanka today is no longer how to avoid another crisis. Rather, it is how to achieve sustained economic growth of at least 7% per annum by 2029.

Unfortunately, much of the current policy debate remains trapped in economic diagnosis. Policymakers, economists, and commentators repeatedly identify familiar problems: (i) low productivity, (ii) weak exports, i(iii) Inadequate innovation, (iv) poor competitiveness, and (v) insufficient investment. While these diagnoses are correct, they are not new.

Sri Lanka now needs economic engineering.

The country requires a clear, measurable, and actionable National Growth Strategy for 2026-2029 that identifies (i) where growth will come from,(ii) what investments are required,(iii) which institutions will lead implementation, and (iv) how success will be measured.

The difference between diagnosis and engineering is the difference between describing a problem and solving it.

The Missing National Growth Target

One of the most striking weaknesses in Sri Lanka’s economic discourse is the absence of a publicly articulated growth target supported by a detailed implementation framework.

Successful economies establish measurable objectives.

Sri Lanka should adopt the following growth trajectory:

2026 – 4%

2027 – 5%

2028 – 6%

2029 – 7%

Such targets would provide direction to investors, public institutions, universities, exporters, and development partners. Without a destination, even the best policies risk becoming disconnected initiatives.

Today, many policy interventions appear fragmented—valuable in isolation but lacking integration into a broader national growth framework.

Growth Will Not Come From Consumption

For decades Sri Lanka relied heavily on consumption, imports, remittances, tourism, and external borrowing.

That model has reached its limits.

No country has achieved sustained prosperity through consumption-led growth alone.

The countries that transformed themselves—Singapore, South Korea, Ireland, Vietnam, and China—generated growth through productive investment, exports, industrialisation, and integration into global markets.

Sri Lanka’s future growth must therefore be driven by investment and exports rather than domestic consumption.

The challenge is not increasing spending but increasing productive capacity.

Export-Led Growth: The First Pillar of Transformation

Every successful Asian growth story has one characteristic in common: exports.

Exports generate foreign exchange, create jobs, attract investment, encourage innovation, and improve productivity.

Sri Lanka should establish an ambitious target of doubling export earnings within the next decade.

This requires moving beyond traditional exports and expanding into:

High-value agriculture

Food processing

Information technology services

Logistics services

Advanced manufacturing

Professional services

Export growth must become a national mission comparable to post-war reconstruction efforts seen elsewhere in Asia.

Without a major expansion of exports, sustained 7% growth will remain elusive.

Manufacturing: The Forgotten Growth Engine

Manufacturing remains the single most important source of rapid economic transformation worldwide. Vietnam provides perhaps the best recent example.

Through (i) industrial zones, (ii) trade agreements, (iii) infrastructure development, and (iv) targeted investment attraction, Vietnam became deeply integrated into Asian production networks.

Sri Lanka possesses strategic advantages:

A prime Indian Ocean location

Strong port infrastructure

Educated labour force

Proximity to India

The country should establish specialised manufacturing clusters focusing on:

Electronics assembly

Medical devices

Processed food products

Boat building

Rubber-based products

Engineering components

Rather than attempting to compete with every country, Sri Lanka should specialise in selected niches where competitive advantages can be developed.

RCEP: The Strategic Door to Asia

Sri Lanka’s future lies increasingly in Asia.

The Regional Comprehensive Economic Partnership (RCEP) represents the largest trading bloc in the world and includes many of the fastest-growing economies.

Membership or closer integration with RCEP supply chains could provide Sri Lankan exporters with access to markets, investment, technology, and production networks that are currently beyond reach.

Unfortunately, discussion on RCEP remains limited compared with its strategic significance.

A dedicated national roadmap for RCEP engagement should become a top economic priority.

The question is not whether Sri Lanka can afford to integrate more deeply into Asia.

The question is whether Sri Lanka can afford not to.

Knowledge Economy: Turning Universities Into Growth Institutions

Sri Lanka’s universities produce thousands of graduates annually, yet their contribution to commercial innovation remains limited.

Globally, universities have become engines of economic development.

Research institutions should not merely produce graduates; they should produce patents, technologies, startups, and commercial solutions.

A national innovation framework should:

Link universities with industry

Encourage commercialisation of research

Support technology transfer

Expand startup financing

Reward innovation and entrepreneurship

Knowledge must become an economic asset rather than an academic exercise.

Dairy, Agriculture, And Import Substitution

Export growth alone is insufficient.

Sri Lanka must also reduce unnecessary import dependence.

The dairy sector offers a compelling example.

For decades, billions of rupees have left the country through dairy imports despite favourable climatic conditions and substantial agricultural potential.

A comprehensive dairy development strategy should focus on:

Improved genetics

Feed production

Commercial farming

Processing investment

Farmer productivity

The objective should be import substitution combined with rural income growth.

The same principle can be applied selectively to other sectors where domestic production is economically viable.

Creating A National Investment Targeting Agency

Sri Lanka does not need another bureaucracy.

It needs a professional institution dedicated exclusively to investment targeting.

Instead of passively waiting for investors, this agency would actively identify and attract strategic investments aligned with national priorities.

Its mandate would include:

Identifying priority sectors

Marketing opportunities globally

Coordinating approvals

Monitoring outcomes

Facilitating technology transfer

Singapore’s Economic Development Board and Ireland’s Industrial Development Agency demonstrate how targeted investment institutions can transform national economies.

Sri Lanka requires a similar mechanism adapted to local realities.

From Economic Diagnosis To Economic Engineering

The next stage of Sri Lanka’s recovery requires a fundamental shift in thinking.

The policy debate must move beyond identifying problems. The country already knows its problems.The challenge is implementation.Every policy proposal should be evaluated against a simple question:

Will this contribute to achieving 7% growth by 2029?

If the answer is no, resources should be redirected.

Economic engineering requires focus, prioritisation, accountability, and measurable outcomes. The era of fragmented initiatives must give way to a coherent national growth strategy.

Summary

Sri Lanka has achieved significant macroeconomic stabilisation, but stabilisation is only the first step toward sustainable prosperity.

To move from recovery to transformation, Sri Lanka should adopt a National Growth Strategy for 2026-2029 built around five pillars:

Export-led growth

Investment-led growth

Manufacturing expansion

Knowledge-economy development

Regional integration through RCEP and Asian supply chains

Supporting sectors such as dairy, tourism, logistics, and information technology should be strategically developed within this framework.

Most importantly, investment must be targeted rather than scattered, supported by specialised institutions and measurable performance indicators.

Conclusion

History demonstrates that no nation has become prosperous by accident. Economic success is rarely the product of isolated policies or short-term political initiatives. It is the outcome of a deliberate strategy pursued consistently over many years.

Sri Lanka stands at a crossroads.

One path leads to modest growth, periodic crises, recurring debt challenges, and continued vulnerability. The other leads to transformation through investment, exports, innovation, manufacturing, and regional integration.

The choice is ultimately strategic.

The time has come for Sri Lanka to move from economic diagnosis to economic engineering.

The future will not be determined by how successfully the country stabilised after the crisis. It will be determined by how effectively it builds the foundations for sustained growth thereafter. If Sri Lanka can articulate and execute a coherent investment-led growth strategy today, achieving 7% growth by 2029 need not be an aspiration.

It can become a national objective—and a national achievement, economic Engineering

The writer, among many, served as the Special Advisor to the Office of the President of Namibia from 2006 to 2012 and was a Senior Consultant with the UNDP for 20 years. He was a Senior Economist with the Central Bank of Sri Lanka (1972-1993). He can be reached via asoka.seneviratne@gmail.com

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